6 Steps To Launch Your API Product MVP
Preparing to launch an API product often – and quite understandably – feels overwhelming to our clients. In this post, we wanted to share some of the frequent shortcuts we recommend to our clients to get to market as quickly (and with as little risk & investment) as possible.
There is a natural temptation when planning to launch any new product to eliminate all open questions and plan for as many variables as possible. This approach is occasionally the right one, but in our experience, when it comes to API products, it most often leads to analysis paralysis and business cases that never make it past corporate risk and investment committees to see the light of day.
The first key to ensuring success with your API product launch is not to build it for your first customer, but to build it with your first customer (as we covered in more detail in this post).
To summarize the points in the linked article, the best way to limit the risk of initial API adoption is to lock in your first customer before any work begins and to ensure they are signed up to join you in marketing the product once developed. Their incentive to do so is generally two-fold: 1) to receive outsized-influence in the design of the product, and 2) (generally) to receive a discount to the product once launched. When choosing this partner, it is important that they represent a common use case in your target market.
While this article cannot cover the complete depth on these topics, below are our top tips to simplify each of these areas and get to MVP as quickly as possible.
1. Product Management: Pricing & Packaging
While we agree that the initial pricing of a product is part art & part science, the key is not to obsess over final pricing until your first partnership is signed. While you will need some idea of the final pricing to support the business case for developing the API, precision is rarely required at this point. Below are two methodologies to develop approximate pricing for your initial offering.
- Value Testing: this idea borrows a concept from the world of early advertising in media. When the value of a given airtime slot was unknown to both parties, the buyer and seller would agree to conduct a ‘value test.’ As a part of this partnership, the buyer would agree to open their books and be transparent about the value received from the advertising time. This data would be used by the advertiser to price future advertisements (in exchange for a discount for serving as a guinea pig). With a willing partner, the same strategy can be applied to the initial pricing of your API product.
- Utilize the Van Westendorp method (and no, we didn’t make that name up to sound smart) :). The good news is that the basic implementation here is less complex than the name might imply. Although the exact questions vary slightly depending on the source, this process involves asking the following questions of your first partner and other prospective customers and then calculating the best price based on the results.
- At what price would you consider the product to be so expensive that you would not consider buying it? (Too expensive)
- At what price would you consider the product starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? (Expensive/High Side)
- At what price would you consider the product to be a bargain—a great buy for the money? (Cheap/Good Value)
- At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good? (Too cheap)
The complete process for using this method is a bit more involved, but the questions above form the basis of your pricing research, which you can use to approximate what appropriate market pricing will be when you launch.
In reality, both of these methods can be used together with your first customer, though the second method is more work (and possibly more accurate) than the first.
2. Commercial Enablement & Readiness
Inside of any large enterprise, there is typically an army of commercial analysts ready to dissect a new business plan from 100 different dimensions. They’ll offer sensitivity analyses, risk ratings, and all manner of financial ‘help’ for you to launch your product successfully from a commercial perspective. They’ll identify gaps in your approach like how you’ll handle invoicing at scale, how you’ll integrate data into the ERP system, who will provide customer support and what it will cost, and several other success-based problems that you really shouldn’t worry about at all in the MVP stage of your API product development.
Also, sadly, if you have to go through this process, you’ll often be put in a long queue that may add months to your initial launch plan.
So, how have we seen clients navigate around this potential quagmire? The key is in the scope of the initial project and request. By scoping the initial functionality as narrowly as possible, and by following our advice to conduct the initial development with your first customer committed and on-board, you can greatly limit the perceived risk of the initial approval.
The final review, post-MVP, can include a more thorough validation of the likely price of the solution (using the methods above), the size of the market, and the costs of continued feature development.
Security, Legal, Compliance & More…
In part 2 of this post next week, we’ll conclude the review of the 6 ways to get to market quickly and discuss security, legal and compliance reviews as well as how to rapidly enable sales, customer success, marketing, and support teams during initial development and launch. Be sure to subscribe if you're not already to receive the post automatically in your inbox when it is published.
If you’d like help answering more detailed questions about your own launch plans, please feel free to visit the main site, reach out on LinkedIn or schedule a time to speak.